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"And when the small bears from the windy place capture the flag, thou shalt know the end is nigh..."

Thursday, June 29, 2006

Game On!

So, the Tribune completed its "debt recapitalization" this week. The stock is up near $32.50. It's all over. Now, management has prevailed and the Cubs won't be sold. All the space devoted to this topic going back to last October has been a waste.

The Cubs won't be sold, game over. Right?

Not even close.

The game for control of the Tribune and the potential freeing of the Cubs is just starting. Now it gets interesting!

See, the Tribune biggest stock holder is, as we now all know, the McCormick Trust. And the head of that trust is one Denis FitzSimons. He's also the CEO of Tribune Corp. And there's no way he's breaking up his company.

'Cept, he's not the largest stockholder anymore. See, in July, 10 million McCormick Trust shares are set to be repurchased. If that goes as planned, the Chandlers will control 15.4% of the stock, compared to the McCormick foundation's 13.1%.

And the Chandler's want the breakup value of the Company, estimated by many to be $46 per share.

Well, if you only control 15% of the stock and want to start a proxy fight, you need allies. As the Trib notes:

With a raft of Wall Street analysts pricing Tribune assets as high as $46 a share in various breakup scenarios, many of the company's largest shareholders appear to be anticipating a bigger catalyst to drive the stock price higher. Speculation has run the gamut from a spin-off of the company's 24 television stations to a sale of one or more of its 11 daily newspapers. A source close to the Chandlers said recently that the family has discussed its options with various cash-rich private-equity firms possibly interested in financing a deal.

Ariel Capital Management LLC, the company Mr. Rogers founded 23 years ago, boosted its Tribune stake by 52% in the two months ended May 31, making it the largest shareholder without ties to management or Los Angeles' Chandler family, which is calling for a breakup of Tribune.

Known as a patient long-term investor loyal to companies' management, Ariel has supported Tribune executives and their plan for a $2-billion share repurchase opposed by the Chandlers.

But Ariel recently has shown an activist side at other local companies in its $18-billion portfolio, agitating publicly for the sale of both Hewitt Associates Inc. and ServiceMaster Co. A similar dose of activism at Tribune could tip the balance of power toward the Chandlers, just as Ariel's current stance buttresses management.

"They're the tiebreaker," says executive recruiter Peter Crist, president of Crist Associates in Hinsdale. "It's what swings the deal."

We've paid close attention here at Ivy Chat to Ariel. They want to get the Cubs out of Trib holdings. In fact, they were an early source of the $46 per share breakup valuation.

It's also interesting to note that Ariel, which is in the red $55 million(!) on Trib stock, recently, "boosted its Tribune stake by 52% in the two months ended May 31." Why would they do that unless they figured to make a big upside. Well, I'm sure they made some back in the buyback, right? Nope:

Ariel is in the paradoxical situation of supporting the buyback while declining to participate in it

Why would they support the buyback but not sell? Simple. To reduce the amount of shares outstanding and make a proxy fight that much easier.

Beyond Ariel, the repurchase plan only netted 45 million shares, about 8 million fewer than planned. Why would so many people hold back? Simple. They figure that $32.50 per share is not as good as they'll get in the near future.

Some people tell you, point blank, the Cubs will not be sold. They're right.

At least until July. After that, anyone who tells you anything with certainty regarding the future of the Tribune Corp. is either wrong or stupid.

Wednesday, June 28, 2006

When It Will Get Fixed

This blog continues to be popular elsewhere in the Cubs Blog Platoon (an Army can't have only 5 soldiers in it). Lately, there seems to be some disinformation about Cub fans, attendance, and when the team draws better and worse. Let's look at the last 25 years (Source material found here):

Year

Attendance

Attend/G

Attend Rank

2005

3,099,992

38,272

4th out of 16

2004

3,170,154

38,660

4th out of 16

2003

2,962,630

36,576

3rd out of 16

2002

2,693,096

33,248

7th out of 16

2001

2,779,465

34,314

8th out of 16

2000

2,789,511

34,438

9th out of 16

1999

2,813,854

34,739

6th out of 16

1998

2,623,194

31,990

6th out of 16

1997

2,190,308

27,041

6th out of 14

1996

2,219,110

27,396

5th out of 14

1995

1,918,265

26,643

5th out of 14

1994

1,845,208

31,275

8th out of 14

1993

2,653,763

32,363

7th out of 14

1992

2,126,720

26,256

5th out of 12

1991

2,314,250

27,883

4th out of 12

1990

2,243,791

27,701

5th out of 12

1989

2,491,942

30,765

4th out of 12

1988

2,089,034

25,476

5th out of 12

1987

2,035,130

25,439

6th out of 12

1986

1,859,102

23,239

5th out of 12

1985

2,161,534

26,686

5th out of 12

1984

2,107,655

26,346

2nd out of 12

1983

1,479,717

18,268

7th out of 12

1982

1,249,278

15,423

10th out of 12

1981

565,637

9,752

11th out of 12

What we see is that the Cubs drew NOTHING until they won in 1984. After 1984, as always happens, attendance went up in 1985. Then, the below .500 finish in 1985 hurt them in 1986. Andre Dawson helped in 1987 as did having 5 All-Stars in 1988.

Then 1990 is fascinating. Despite having a winner the year before AND hosting the All-Star Game, attendance dropped. My suspicion is that people knew the 1989 team was more lucky than good and didn't really buy into the team for 1990 (Note: I bought into the team in 1990 for season tickets, so at least *I* got suckered!)

Attendance then started to rise. Why? Simple. The Trib suits felt the crunch in 1990 of the lost revenue from a playoff team the year earlier. So what happened starting in 1991?

George BellDanny JacksonMike Morgan

I'm not suggesting these guys were any good, I'm suggesting that FAN APATHY AND THE DESIRE FOR THE PROFITS ASSOCIATED WITH THE POSTSEASON GOT THE SUITS TO SPEND MONEY ON PAYROLL!

This is what's driven this team the last 15 years. A fear that the lack of marquee players will lead to a decline in attendance.

It's been said that in the 2002 season attendance "start(ed) to decline." That would be plausible if it were supported by more than a single data point. Between 1999 and 2001, attendance fell by 34,000. That's nothing. One game's worth or fans. That could be explained by weather, a rain out, whatever. A 1% one time drop is statistically meaningless.

How does this affect today? Simple. The team is afraid to trade the "name" players because it might hurt attendance. Demonstratably false. Yes, winning brings in a few more, but a Sammy Sosa did more to bring fans in from 1999 to 2002 than did wins and losses. Management unlearned the lessons of 1984 and 1989 because the fans did not demand a winner.

Look at the other side of town. Dan Burnstein said today on WSCR, the White Sox were dying. They needed to win to stay alive. They won. Now, they may pass up the Cubs in popularity in this town. How did they win? They kept changing managers and GMs because they needed to generate revenue to remain a viable franchise.

Until that happens for the Cubs, until they are threatened with viability, until WE stop spending money, we're in for a lot of losses.

Let's See If I Understand This

Wind blowing in and Greg Maddux gives up four dingers?

I go to the bleachers last night and the one person who would probably love to shove a frosty malt in my face was in New York?

Dusty Baker says that all he wants is his team back and to see what he can do, then his current players go out and sleepwalk through games. If my boss told me I was just holding a desk until I could be replaced, wouldn't I be a lazy ass, too?

If there were 39,000 people at Wrigley Field last night, then about 10,000 of them were dressed as empty seats? In the fifth inning? When all the late-arrivers are supposed to have arrived?

If the goal of golf is to hit the ball as few times as possible, wouldn't it be ideal not to play at all?

The Batter's Eye Suite seats 200 people at $200 per head? No wonder it was converted mid-stream from restaurant to $40,000 per night private club.

The Cubs now get potentially $3,240,000 in new revenue from what used to be shrubbery and the payroll went DOWN? And Rafael Furcal was TOO PRICEY?

When Derrek Lee calls out the team for not showing up, isn't he calling out his manager?

The Cubs players and coaches don't show up for games, but 39,000 fans who DO?

Saturday, June 24, 2006

Vocabulary Lesson

Barry Rozner takes a day off from parenting to talk about the Ozzie Guillen fiasco. He makes a few good points, and several bad ones. But what stuck out in my mind was this sentence:

I don't use the slur Guillen used, but every time I leave a putt short I mutter a slang word quietly to myself that describes a part of the female anatomy.

While I have a decent idea (and that idea is of a word that would really upset two women Cub fans that come to mind), I can't figure out exactly what that word is. Of course, everything reverts to Seinfeld at some point.

Friday, June 23, 2006

Finally

Did you hear the news? A sports franchise just followed this page's advice. This franchise, with a storied history, terrible ownership, and operating in one of the largest cities in this country, just fired their high priced coach. Not only that, but the general manager stepped into the vacuum created by the coach being let go to coach the mess he created. This guy will do double duty as GM and head coach.

It's just too bad.

What's the problem? Simple.

It's the Knicks firing Larry Brown and replacing him with Isiah Thomas making the moves and not Jim Hendry replacing Dusty Baker.

But all hope is not lost! It looks like we won't have Dusty Baker to kick around much longer. If Mike Kiley is writing this, and he's the guy that has been saying since the beginning of time that an extension is a done deal, then there must be something to this.

Jason Stark poo-poohed this story this morning, but I tend to trust a local reporter who changes his story 180 degrees more than I trust a national writer.

Once Dusty goes, all that will be left is for MacPhail to go. And then, hope can return.

Thursday, June 22, 2006

New Markets

At the request of our biggest fans, we now introudce the first Hot Man of 24!Louis Lombardi's dead on 24 now. Haven't seen him on "The Sopranos" in a long time. Well, at least the ladies won't forget this piece of beefcake now.

Great Minds Think Alike

I heard last night that the Florida Marlins lost. For the first time in 10 games. I wake up and Barry Rozner has the exact same thoughts as I had:

Granted, the Florida Marlins are not going to play this well all season, and they could still finish worse than the Cubs.

But whom would you rather be, the Cubs, one of the coldest teams in baseball, with a $94 million payroll and no future to speak of, or the Marlins, one of the hottest teams in baseball, with Joe Girardi as manager, a $15 million payroll and a brilliant future?

Repeat after me: Blow it up and start over, blow it up and start over, blow it up and start over...

There's a reason Florida has won two titles in 10 years and the Cubs have none in 98.

Another Trib Subsidiary Speaks

Over in the LA Times, there's an interesting article about the Chicago Cubs. Can't find it? Try the business section:

The Chicago Cubs may be turning in a dismal on-field performance this year, but as a financial entity, it is still one of the most valuable franchises in pro sports.

That could be important if the Cubs' owner, Tribune Co., remains under shareholder pressure to sell off corporate assets or there is a wholesale breakup of the media conglomerate.

The possibility that the Cubs might land on the market has prompted speculation on Wall Street and among sports experts about the team's value, with most estimates settling in a range between $450 million and $550 million.

The lower figure would make the team the fifth- or sixth-most-valuable franchise in Major League Baseball even though the Cubs, currently in fifth place in the National League Central division, haven't won a World Series since 1908.

"The Cubs' attendance is always strong, it's in a large, passionate baseball market and it has got a long history," said Jeffrey S. Phillips, a director at the investment banking firm Houlihan Lokey Howard & Zukin who specializes in sports transactions.

There's more great stuff in the article. It's almost as if they've cherry picked from this site.

"I don't think you'd have people flocking out to see the Cubs lose in a different facility," said Maury Brown, co-chairman of the business of baseball committee of the Society for American Baseball Research.

You mean, people are Cubs GAME fans first and fans of the TEAM second?

Another selling point: the Cubs' national exposure on Tribune's WGN "superstation," a local TV station that also functions as a cable channel, carrying games to as many as 55 million viewers nationwide. The Cubs also are carried by a regional sports network operated by Comcast Corp. in which Tribune holds a 25% interest.

The terms of both deals are undisclosed, obscuring the Cubs' true profitability. The value of the WGN contract is further muddied by Tribune's ownership of both the team and the station, which gives the company leeway to shift profits and losses from one operation to another.

"Broadcast-related revenue is the wild card," Phillips said.

In other words, the Cubs may not have the maximum cash available to an owner-who-owns-as-a-hobby to spend on payroll?

As an operating asset of any large media conglomerate, a sports team is generally small potatoes. The Cubs' operating revenue, estimated at less than $200 million a year, amounted to 3.5% of Tribune's total revenue of $5.6 billion in 2005.

Wow. The Cubs are small potatoes in the Tribune farm.

One question actively debated in the sports world is whether the Cubs would perform better under private, rather than corporate, ownership. Although the team has spent generously - its 2006 opening-day payroll of $94.4 million ranked seventh in the league Â- corporate managers are prevented from the no-holds-barred investments that often spell victory.

"Overall, the Cubs haven't won, and I don't think there's a better metric," said Andrew Zimbalist, an economist at Smith College and author of a 2006 examination of Selig's leadership entitled "In the Best Interest of Baseball?" "On balance, it hasn't been a successful ownership."

Massive applause.

The only question I have is this:

Why write this article now? Someone trolling for something? What does the Trib usually do in advance of making a move?

Hmmm...

:::UPDATE:::Poster CCD suggests that this article was green lit by non-newspaper Trib higher ups. No chance that the editors wait for a green light from above to write an article like this. A better bet is that the idea was hinted (read: handed down) from above.

I've got a family friend who was approached by Steve Stone to be an investor in a planned buyout of the Expos and a relocation to Las Vegas. This source informed me last week via e-mail that he's heard of a deal book put together by an I-banker to independently solicit bids on the Cubs from investor groups. By independent, I mean that the book was not solicited by Tribune.

Wednesday, June 21, 2006

Ignored Women

I know a lot of people come here looking for pictures of women who have starred on Fox's "24". Well, here are three of Jack Bauer's women who seem to be appropriate to look at today.

The first is Sarah Clarke.I didn't like when they killed her character, Nina Meyers, off. Not because Sarah's that good looking, just because I liked how nasty Nina was.

The next is Leslie Hope.Fox took a big risk ending Day (Season) One with Nina killing a pregnant Teri Bauer. Then again, the whole lost memory thing she went through in the middle of that day was just bizarre. Don't really miss her from the show.

But the best of the bunch has to be Sarah Wynter.Clearly the worst actress and the least interesting character of the bunch. That said, I don't think many people were interested in her as a thespian.

Let's just say that this is the best looking Sarah that I've seen in a while. I can only Hope we see more good looking ladies for Jack during Day Six next January.

Tuesday, June 20, 2006

Go Bluejays!

With the press finally starting to question Dusty Baker and the possibility (no longer inevitability) of his contract extension, it's time to do something productive and start talking about who should be the replacement for Dusty when he goes.

It seems clear that, short of a 15 game winning streak, Dusty Baker will not be here next year. It may be his own choice or it may be the Cubs. Hell, it may be the Cubs increasingly likely new owner who decides to go another direction. What's certain is that Dusty needs to leave.

So, who replaces him? Jay Windsock says to let Dusty go today. He then suggests Bob Brenly take over. That seems an obvious choice because the Cubs are already paying him $750,000 this year. Also, with the possible spin off of the broadcasting unit, the synergies of having him at WGN could be going away.

But Bob and Len Kasper are really just starting to get some chemistry. Why break it up now on a possible interim-only gig? Were I Bob, I'd want a 4+ year deal to leave the booth and some player personnel input. Plus some payroll guarantees.

That won't happen until the Trib share buyback is complete.

Jay is right about one thing. It's time to let Dusty walk now (either that, or extend him now and get the speculation over with). There's really only one choice to replace Dusty on an interim basis. Make the guy that put this crap together run it.

Make GM Jim Hendry pull double duty. He has relevant experience. And moving a GM to the dugout has worked in the past (see: Cox, Bobby).

Who knows? Maybe having the boss in the dugout might actually motivate some people differently than they are now being motivated. That might make this team interesting to watch at least.

Sunday, June 18, 2006

The Ellipses...

...with Michael Barrett missing his third straight game due to some sort of owie, why didn't the Cubs drop the appeal of Barrett's suspension and have him start serving the 10 days while he was already hurting? The brainlessness of this team's front office never fails to amaze.

...and if you are wondering why Glendon Rusch will not be designated for assignment, it's simple: It would mean the Jim Hendry could be DFA'd as well. See, back in 2004, many smart people suggested DFA-ing one Alex Gonzalez and signing Miguel Tejada. But the Cubs, in their cheapness, did not do that because that would mean eating five million bucks. If the 2006 Cubs announce that they are willing to eat five million bucks to get rid of a single player now, wouldn't they then also be willing to eat the estimated two-point-five million bucks that is owed to the guy responsible for spending over two hundred million bucks to be 20 games under .500 over the last 220 or so games? No chance in hell Hendry releases either Rusch or Neifi Perez. It's only Hendry's job that would come up for release next.

...do you think Detroit Tigers fans are as pissed at the Cincinnati Reds as White Sox fans are at the Cubs?

...and as bad as Dusty Baker has been since October 2003, the roster this year is nearly all the responsibility of Jim Hendry. Every player on the roster accept Kerry Wood and Mark Prior are here because Jim Hendry made the decision to sign them. Then again, pointing this out is just counterproductive, I guess.

...speaking of that, isn't refusing to stop purchasing a product with which you are dissatisfied the definition of counterproductive while complaining and lowering demand the definition of productive? However minimal?

...as the Cubs head to Cleveland and the Pirates head to Kansas City, what are the odds the Cubs have the worst record in the NL by Wednesday?

...short of a 10 game winning streak, what could possibly get the extend-o-meter to turn red?

Pop!

Now that Mark Prior is back, and pitching worse than the man he replaced (Glendon Rusch) can a final nail be placed in the 2006 season? Those of us who still cling to the idea that an effective Mark Prior will the key to turning a season around will hopefully now see the light.

The next step if for the paying customers to show that they are dissatisfied. If they don't show that, there will be no changes for next year. We live in a capitalistic society ruled by supply and demand. If the demand for a product doesn't change, it will continue to be supplied in the same form. If the quality of a product declines amd demand does not change, then quality will continue to decline until demand starts to drop.

The Cubs can't even get some love from their owner. Looks like the Chandler's are right.

Gutless

All this talk about bean ball wars and retaliation stems from the White Sox-Rangers series. All these people are missing a huge point. In the AL, where there is the designated hitter rule, the pitchers never have to worry about facing the music themselves.

So long as pitchers only have to worry about their pocketbook being hurt and not their skulls, retaliation in the AL is a joke. You want a reason to get rid of the DH? That may be the best.

No More Years

There are dolts out there who keep saying that Dusty Baker deserves to keep his job. They list a litany of reasons as to why he should keep his job. Given an analysis, only two reasons are valid. Let's list the invalid reasons and break down why they are invalid.

People are only clamoring for Dusty’s head since the Cubs are on pace for a 90+ loss season.

This is known as the straw man argument. You set up an easy-to-destroy argument and pitch it as the argument others are making. People who have watched this team play know two things about Dusty Baker. The first is that he brought the Cubs some much needed cohones during that 5-game series with the Cardinals back in September of 2003. Reading his lips in this instance was the highlight of Dusty's tenure.

The second thing they know (but refuse to admit) is that the descent of Dusty into drooling fool began about 5 weeks later when he used Dave Veres in Game 7 of the NLCS. Since then, he's de-evolved from super human to primordial slime in only two and a half years. What's been the low point? Probably having a meeting with Steve Stone the last week of 2004 to discuss Stone's broadcast instead of worrying about how his team was blowing a playoff spot.

He can recruit free agents to come to Chicago.

This one holds no water for a couple of reasons. First, what good does that skill do if the Cubs don't go after free agents? When was the last time that Jim Hendry went after a prime free agent? Hell, back in the winter of 2002, Jim Thome offered the Cubs a hometown discount to sign. Jim Hendry bought lunch and passed on the contract. What could Dusty have done there? Thome was begging to play in Wrigley (which would have given the Cubs the pennant that year, easily). Dusty's recruiting job would have been superfluous.

OK, you say. They did go after Rafael Furcal. That brings up reason number two why this argument doesn't work. The Cubs finally go after a prime guy and Dusty can't land him. Why? Supposedly, Furcal demurred because the Cubs insisted on a DUI Free contract. You mean that Dusty couldn't call Furcal and say, "Don't worry, dude. I've got 'yer back."

Dusty had a chance to perform here. He failed. He doesn't help recruit free agents. The argument is moot.

He had down years in SF before a string a great years.

That's also a straw man. The San Francisco team had a lot more talent, much of it probably chemically enhanced. All this shows is that if you give Dusty a hyper talented (and drugged) team, he can win (at least until he over-manages in the playoffs). He did that here with Sammy Sosa. Do you see a lot of hyper talened, drug fueled types here? Do you see Jim Hendry going out to get those types of players? Another moot argument.

You don't want to change regimes every few years.

Now this would hold water if the regime was new. Given that the people hiring Dusty have had 12 years with minimal success, it's hardly a novel suggestion that people be fired for imcompetance.

There are two valid reasons to keep Dusty.

Hiring an interim manager can do more harm than good.

Such managers may actually be auditioning for the job permanently and may put wins ahead of development of players. The Cubs have a way to handle this: Make ex-Creighton coach Jim Hendry manage out the year.

Unless you replace Andy MacPhail and then Jim Hendry, it doesn't really matter who the manager is.

This is really the only, acceptable reason to keep Dusty. Luckily, Ariel Capital and the Chandlers give us fans a chance to see real change.

Wednesday, June 14, 2006

Just Where Have You Been?

So I take a few days away from the office to get some medical checkups out of the way (note: as you age, the checkups can become more invasive). Turns out that I only needed a day to recover. The Wife and I take Murton's Kids down to Millenium Park and for lunch on Michigan Avenue. As the Six Year Old admires the moon rock and the Cubs jersey in the window of Tribune Tower, I snap this picture:At the VERY SAME MOMENT, about 300 feet above me, Denis FitzSimons's lunch was assending his trachea. Why? Bloomberg has the best report:

The publisher of the Los Angeles Times and the Chicago Tribune should sell units or put the whole company up for sale, some of the company's largest shareholders said. They cited a 10 percent drop in the stock in the past year and management's failure to maximize profits of TV stations and the Chicago Cubs baseball franchise.

"Something will be done," said John Miller, a money manager at Ariel Capital Management, which owns 10.3 million shares, or 3.4 percent, of Tribune. "You have to take a more aggressive strategy. The true value of the company isn't being reflected in the share price."

As 1060 West noted, this is the first time we see in print that the Cubs are considered an insufficiently performing investment for the Tribune. The reason why is obvious. Profits are not being maximized at the Cubs.

Now, that's insane some people will say. How can profits be too small? They have revenue coming in from TV, radio, Comcast, new seats, a new skybox, the rooftops, a rotating advertising sign. And lemmings buying seats regardless of quality! How can profits be low?

Well, that list is the revenue side. No one's commented on the expense side. The expense side includes $94 million for payroll, $4 million for Dusty Baker, and probably another $5 million for Andy MacPhail and Jim Hendry. What the investors are saying is: Why spend so much if people are watching, listening, cableing, partying across the street, advertising, and just plain going regardless of performance?

In other words, the Chandler's and Ariel Capital just said the Cubs would be better served as an investment with lower overhead (read: payroll) so long as no one seems to care about winning.

Monday, June 12, 2006

As The Stock Market Turns

By now many of you have read this article in Crains' Chicago Business about Ernie Banks being a frontman for investor groups buying the Cubs:

(Banks) says two groups have approached him about participating in a bid: Giuliani Partners LLC, headed by former New York Mayor Rudolph Giuliani, and Los Angeles-based buyout firm Comstock Capital Partners LLC.

Mr. Banks says discussions didn't cover what, if any, financial backing he would provide or what stake he would have in the team....Mr. Banks would lend star power to any buyout offer. He already serves as a Cubs ambassador at games and other team events.

Why Ernie Banks? Simple. The buyers are serious. They need to put a positive, public face on their bid to get people interested. Who better than Ernie Banks to get the fans behind a sale? The buyers also need to give the Trib a little push to talk about a sale. Who would be better than the Trib's own Cub ambassador to get the Trib to the negotiating table?

Selling to Ernie (and the real investors) also offers the Trib an honorable way to save face making the sale. "How could we refuse Ernie? Who better to entrust the franchise?" would be the first words from Denis FitzSimons.

The article also has this this interesting graphic.Gee. Ariel Capital suggesting that the Trib gets more value selling the Cubs. Whoda thunk it? They go on to say:

If Tribune is broken up, it's unclear whether the Cubs would be included in any sale or spin-off of the company assets. One of Tribune's arguments for owning the team has been that it provides free content to WGN-TV. That synergy has diminished in recent years as fewer games are aired on the station.

A separate sale of the Cubs could bring Tribune shareholders more cash than they would net as part of a broadcast package, and Mr. Banks and his backers would surely face competing bidders if the team is auctioned.

"It's a trophy property with a scarcity value," says John Rogers, CEO of Ariel Capital Management LLC, the Tribune's sixth-largest investor, with 10.3 million shares.

Another article was in the Trib. This article was essentially a profile of Trib CEO Denis FitzSimons with some detail on why the Chandler's are balking at the planned stock buyback.

The key in this article is an explanation of the Chandler's motivations. In short, they want the Trib to be broken up to maximize the possibility of a takeover of the Trib. See, the Chandler's don't want to sell their Trib stock because that would create huge tax liabilities. Instead, if someone high growth company would acquire the Trib in a stock-for-stock sale, the Chandler's could unload the stagnant Trib stock tax free for something with real growth possibilities.

Then, you look at part of the reason FitzSimons wants to add all this debt tot the Trib?

Corporate governance experts said the plan had another ramification: By adding $2 billion in debt to Tribune's balance sheet, it would act as a "poison pill" to fend off raiders.

That's the LAST thing the Chandler's want.

The article concludes with another estimation of the Trib's breakup value. They, like Ariel, estimate the Trib is worth about 35% more in pieces than it is trading for right now.

Conclusion: The sale of the Cubs is going to happen, one way or another. Soon. As the Trib article notes:

But at this point, FitzSimons may need more than a firm hand to fight off unwanted suitors.

"There's obviously another shoe that is going to drop," said a large private-equity investor with no stake in Tribune shares. "Private-equity investors are interested in anything that crawls. I'm sure all the usual suspects have their investment banks working overtime."

Sunday, June 11, 2006

A Real Ace

Kerry Wood is on the disabled list again. Why are we not surprised? What's interesting is that this is his 10th trip to the DL in his 8 year career. We've all thought of him as an ace for years. We were just wrong on what KIND of ace.

Fighter pilots are disginated aces with 5 confirmed kills. Now that Cubs trainer Mark O'Neil has confirmed Kerry's latest DL trip, it's time to recognize Kerry as a Double Ace.

We Cub fans may never be able to rely on Kerry Wood to do anything as a starter. And those of us who think that a guy with a 88 MPH heater and a soft curve have a future as a closer are just dumb.

But perhaps he has a future with Rick "Slider" Rossovich as his wingman.

Thursday, June 08, 2006

Parsing

While the nightmare of drug use in baseball continues to follow those who have denied it for a decade - no one more so than Bud Selig - there remains one unopposed fact of which the commissioner and his owners have always been certain:

The paying customer couldn't possibly care less.

Dead on, Barry. So long as the outcome of games aren't fixed, all the paying customers want is to be entertained. All the players want is to be paid in large sums. All the owners want is to collect large sums of revenue.

The result is that the players take drugs to make themselves better entertainers and grab a bigger paycheck. The fans pay more dollars because the games will be more entertaining with juiced athletes. And the owners turn away and laugh because of the millions they take in whole not caring if the players die at 50 instead of 90.

The Cubs, however, caution that Wood's visit to the doctor is nothing extraordinary and that the stiffness Wood has been experiencing after his 4 starts this season is normal....Wood, who turns 29 on June 16, made his first start of the season May 18. He pitched five days later, as most starting pitchers do, but since then the Cubs lengthened his rest between starts because of stiffness in the shoulder, a condition the Cubs say is normal for a pitcher on the comeback from this surgery.

"He's never used the word pain or anything like that," O'Neal said. "It's nothing that most people coming back from surgery don't go through. That's what we talked about earlier. They're just very temperamental joints. But we thought it was important to get the doctor that operated on him involved, and the sooner the better."

The Cubs still list Wood as their starter for Sunday's game against the Reds, but that could change. There has been no talk of putting him on the disabled list.

"I don't anticipate, and neither does Dr. Gryzlo (team orthopedist Stephen) or any of the rest of our medical staff anticipate them finding anything significant," O'Neal said. "We're just trying to do everything we can to help him get through this."

As of Wednesday, O'Neal said neither X-rays nor an MRI were planned for Wood in Cincinnati.

What's sad about all this is that there will be some Cub fans who will eat this up.

It's time for Kerry Wood to move on. Jim Hendry can't be trusted to GM this team because he refuses to realize that Kerry Wood is unreliable. Why get Kevin Millwood when you already have Kerry Wood thinks Jim.

If the Cubs want to win under Jim Hendry, they have to Hendry-proof the team. And that means farewell to the once Kid K.

Wednesday, June 07, 2006

Mr. Market

Just before Chris Scvanshtucker Troha tipped us off in the comments, I was reading this from Crain's:

Three key members of the Tribune Co. board have opposed a recent move by the media group to repurchase $2 billion worth of its shares - setting the stage for a possible showdown between the dissenters and company executives....In its Monday filing, Tribune disclosed that the buyback was approved by eight of its 11 directors. Casting votes against it were Jeffrey Chandler, Roger Goodan and William Stinehart Jr. of Chandler Trusts, which owns 12.2 percent of Tribune's stock.

The brief mention of the board vote in the filing offered no details on the disagreement, saying only that Chandler, Goodan and Stinehart "advised the Company that they do not share the opinions" of the Tribune on the repurchase plan.

In case you haven't been following the story closely, the Chandlers are the previous owners of the LA Times. They received their interest in the Trib when the Trib bought the Times a few years back.

Now, with the three Tribune board members from the big-shareholding Chandler family signaling they don't like FitzSimons' $2 billion plan, media investors are wondering if Tribune isn't being pushed onto the auction block -- regardless of what management might like....The move suggests the Chandlers could be looking to find some allies who don't agree with the buyback solution to the company's problems.

So! The reason the Chandlers went public was to stir up dissent! The Chandlers know they'd need three more board votes to change anything at the board level – an unlikely proposition. That means shareholder activism is the key. And not just the public, but the big institutional holders.

So, who could be the allies? Let's look at the major Trib shareholders:

We already know one of the allies to the Chandlers is Ariel Capital given their statements in the past about divesting non-core, low growth assets. One could logically assume that the McCormick Foundation and the invested management are on the side of the buyback. Those two groups total up their stakes like this:

That leaves Barclays, Price (T. Rowe), and Lord Abbott as the three major power brokers in this transaction. They control 38,015,322 shares which equates to 12.56% of the stock. This makes them every bit the player that the McCormick Foundation and the Chandler Family Trust are.

If you want to know the future of Tribco, and the probability of the Cubs being sold to an individual who understands sports teams are a public trust, watch for any public statements from these three groups regarding their Trib shares.

"A Public Trust"

1060 West's Gaius is going to love this. Barry Rozner >quotes Mark Cuban from a CNBC interview the other day:

"If you really want to win and be a contender, it’s probably a break-even business with an equity appreciation," Cuban said. "It really depends on where your head's at. I've been lucky and I've done well (personally) financially, so for me it's a passion more than it is a business, and winning comes first.

"When it's all said and done, the Dallas Mavericks don't belong to Mark Cuban. They belong to the city of Dallas."

Chew on that if you are still a person who thinks the Trib shouldn't sell the Cubs and won't sell the Cubs because the Trib needs the Cubs' cash flow (read: your dollars) for debt service.

Future Future's Watch

Here are the Cubs 2006 draft picks. Can't say I recognize a single name beyond Jeffrey Samardzija, and that's only because his name's been in the press a lot lately. I'm guessing that the Jose Hernandez picked in the 18th round isn't the same guy who played for the Cubs 15 years ago.

Sunday, June 04, 2006

Screwed Up

Back a few months ago, I told the Six Year Old to watch Matt Murton closely. See, the Six Year Old is really starting to be a pretty good T-Ball player. He also watched a lot of Cubs games. I wanted him to pay attention to how Murton approaches batting. Taking pitches. Working the count. Going to the opposite field. What red hair looks like on an elder.

I might have to tell him to stop watching Matt.

Given how well Matt played last year. Given how poorly he's playing this year. And given how well Korey is playing over in Baltimore, one can only conclude that this coaching staff has screwed Mr. Murton up so badly that all his line drives from 2005 are now pop ups and whiffs.

Dusty Baker isn't only costing the Cubs in 2006, he's screwing up the Future, too.

Friday, June 02, 2006

After The Rental

With the Cubs not worth watching, time has been available to watch DVDs. This time, the Netflix que churned out a winner.What a phenomenal series. David Brent may be the worst manager combined with the most narcissistic individual ever portrayed on camera. In fact, if you've ever actually worked in an office environment, you are thankful your boss isn't as bad as Brent.

Series 1 plays out much as a formula piece than does Series 2. You wonder as you watch Series 1, how does Brent keep his job? Series 2 answers that question.

But what brings the whole thing together are the two Christmas Specials. Brent goes from bad boss to truly loathsome in these episodes. But the writers, Ricky Gervais (who plays Brent) and Steven Merchant, are somehow able to redeem Brent with a single line to Finchy.

The love story between Tim and Dawn is also non-traditionally handled during the first two series. And, while their end in the specials is predictable, it still comes off as satisfying (in no small part to Dawn's secret Santa gift).

But perhaps the best thing about this show (and BBC's Coupling as well) is that it ended at the right time. Instead of US Network requirements of 100 episodes so that the series can be stripped and sold for syndication, the BBC allows the writers to show the audience that less is more. I believe there are a total of 14 episodes. All well worth watching.

Makes me want to see if Dunder-Mifflin is anywhere near as wild of a company compared to Wernham-Hogg.

Thursday, June 01, 2006

Overheard

Jim Hendry was on ESPN Radio this morning. He basically rattled off the same things he said in the papers this week: It's his fault that the team isn't playing well. No one is being traded. Dusty Baker will get a chance to pull this team out of it's tailspin.

But then there flashed a little bit of insight into the mind of Jim. Mike Greenberg asked Hendry what he thought of Roger Clemens returning to the Astros. After Hendry joked about how he wished Roger would have gone to the AL East, he then Freudian slipped commented how great Roger has been for the Astros.

Hendry said that Roger had turned that team into one of the premier teams in baseball and that "attendance was flourishing" in Houston.

Pardon me, but Hendry chose Roger's affect on attendance as his measure that Houston was now a premier franchise? No mention of two straight playoff appearances? First round playoff series wins each year? A pennant the second? Isn't the real measure of Roger's affect on the Astros WINS?

Ah, but this man Hendry works for the Cubs. Jim Hendry's job is supposed to be based on procuring wins. Alas, we all know what the metric is for success on the North Side of Chicago.